Some businesses will sell only one product and not make any others. But most businesses sell a wide range of different kinds of products. If a business sells for example cars then they will make different kinds of cars suited to there customers. Such as a family car or a work car.
The product life cycle is development, introduction, growth, maturity, saturation and decline. This is the life that every product takes. The product is first thought of and then developed into a product that the business thinks will sell. It is then brought into the shops and shown to the customers. People will start to buy they product if they like it and the business will grow. Once the sales have evened off and are staying at a steady rate the business might add new types of the products such as different colours. Then the products won’t be bough as often and the business will shut down.
Price
The six step process to deciding a price starts with setting a price objective. The business has to decide whether they want to survive or maximise share. The next step is to determine demand; this is when they decide whether or not to make the price higher or lower. The next step is to estimate cost, this is figuring out how much everything will cost such as promotion and distribution. The next step is to analyze competitors such as the price for their products and the cost for the business. The next step is selecting a pricing strategy this strategy explains itself. The final step is to select a final price, this is when they decide a price and test it out.
There are seven parts to the pricing strategy. They are skimming, penetration, premium, captive product, economy pricing, psychological and product line. Skimming is a high price that skims the top of the markets price. Penetration is when they introduce a new product at a low price to get buyers interested. Premium is a price that is set high so it makes customers thinks its high quality and luxury. Captive product is when the products are for a business and are sold to a business by suppliers. Economy pricing a product at a very low price so it gets lots of people to buy it. Psychological is when a business puts a product at 99p to make people think that it is cheaper when it’s basically the same price. The last pricing strategy is product line this is when it is the same product but priced differently and different versions of it.
Place
There are two channels of distribution. They are direct and indirect ways. Direct selling is selling straight to the customer so from business to customer. Indirect distribution is selling through a middle man. They sell their products to a business who then sells it to the customer. This way they do lose out on some of the profit.
The places that you can sell your product are -
- Shop - Both
- Website - Both
- Mail Order - Direct
- Whole Sale - Indirect
- Direct Sales - Direct
- Telephone - Both
- Trade Fair - Indirect
These are the places that you can sell and next to them say if it is direct or indirect distribution or both.
Promotion
The AIDA model is a way to get customers interested in a product. It starts with attention, then interest, then desire and finally action. This kind of promotion is dependant on what stage they are in the products life style, their competition, the marketing budget and their target market. They will need those four things to make AIDA successful.
There are four parts to the promotional mix that are very important. They are advertisement, sales promotion, personal selling and public relations. Advertisement is a paid form of promotion. It is used to try and persuade a customer or potential customer to buy their product. Sales promotion is a boost for the product it is when a business offer coupons or loyalty cards so that when they try the product and like it will come back for more. Personal selling is where a seller shows the customer the product perhaps face to face, over the phone or a video call. The business will have to train staff to be able to do this. Public relations is the image of the business. It is based on what the customers think of the business. The business might get the media to say something to promote them better such as saying they have gone more eco green than ever to get customers to buy the product.
